Record debt and higher interest rates set to double government borrowing costs by 2025

JH Sovereign Debt index

Record government debt and soaring borrowing costs are set to put a significant strain on taxpayers and public services, but these challenging market conditions present opportunities for investors.

According to the Janus Henderson's Sovereign Debt index, published today (4 May), global government debt rose 7.6% to a record $66.2trn in 2022, while higher interest rates meant government borrowing costs jumped 20.9% at the fastest rate since 1984. The interest paid on sovereign debt reached a record $1.4trn last year and is set to double in the next three years. By 2025, the effective interest rate paid on government borrowing will rise from 2.2% in 2022 to 3.8%. This will cost an additional 1.2% of GDP, the firm said. British Business Bank plans 'sovereign growth fund' ambitions -...